“Removing Roadblocks on Your Path to Success”
Asset Based Lending Can Fuel Your Next Business Expansion
Businesses with increased liquidity and working capital needs may find Asset Based Lending (ABL) to be an excellent alternative to traditional bank financing by generating more liquidity and more efficient working capital management in certain circumstances.
ABL tends to provide more liquidity with less restrictive financial and negative covenants. Asset Based Lending achieves this by utilizing a company’s current and noncurrent assets as building blocks for its debt structure, focusing on liquidity and relying on collateral monitoring for assurance.
An article entitled “Global Central Banking in 2015, a First Quarter Update for 25 Economies” stated:
“The world’s central banks will navigate three defining cross-currents in 2015: A Federal Reserve that has grown more confident about the prospects for the U.S. economy; troubling doubts about growth in the world’s other large economies; and an oil price drop that will make it difficult to read which way inflation trends are moving.”
“In 2014, this was a cocktail for a stronger dollar. A broad index of the U.S. currency’s value increased 12.5% last year, a trend that could well continue if central banks behave as expected. A stronger dollar, better growth prospects and higher credit costs could also be a recipe for capital flows into U.S. dollar assets.”
As the U.S. dollar strengthens and more capital flows into the U. S. from other countries, the four challenges that ABL helps businesses address most will become even easier to solve. The primary indicators to look for ABL based solutions are performance setbacks, growth initiatives, expansion possibilities and capital-market opportunities.
Companies experiencing performance related issues such as financial deterioration, industry downturns and operational inefficiencies often require funding while they work towards a full resolution. ABL can provide the necessary liquidity to enable management and its advisors to experience a turnaround (see “Case Study for Asset-Based Financing Solution“).
Businesses seeking to maximize their growth potential require funding for capital expenditures, working capital and fast organic growth. ABL is a strong solution because it is more leverage tolerant and can help solve working capital deficiencies created by fast growth.
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If you have any questions about how Pacific Crest Group can help make 2015 a success for your business, drop us a line or call us at 415-461-2586!
Until next month, we wish you the very best and much success in your business.
This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.
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